GHA: Hospitals pump more than $39B into state’s economy

ATLANTA—During a time when Georgia’s economy took a nosedive, Georgia hospitals continued to provide the state a major boost by pumping almost $39.1 billion into its economy in 2009, according to a recent report commissioned by the Georgia Hospital Association (GHA), the state’s largest hospital trade association. This is an increase of more than $918 million from 2008, and an increase of approximately $3 billion from 2007.

“While Georgians have always been able to trust the Georgia hospital community to meet their health care needs, they should know that hospitals are also vital to the economic health of our communities,” said Georgia Hospital Association President Joseph Parker. “Our report shows that, during a time when so many Georgia businesses were suffering, the Georgia hospital community continued to be a major source of economic stability throughout the state.”

Hospitals, however, are beginning to show signs of distress from the economic downturn. The report revealed that, in 2009, Georgia hospitals provided more than $1.5 billion in uncompensated care in 2009, an increase of more than $27 million from 2008 and a whopping $116 million jump from 2007. This was primarily due to the state’s unemployment rate climbing into double digits leaving hundreds of thousands of Georgia families without any health care insurance and forcing them out of primary care settings and into hospital emergency rooms.

“The growing uninsured burden in Georgia poses a major threat to our state’s entire health care delivery system,” said Parker. “Hospitals have been heroically standing in the gap for the uninsured for many years, but with so many Georgians out of work, we’re concerned that the weight of caring for the uninsured is becoming too much to bear for many Georgia hospitals.”

In 2009, over half of Georgia hospitals lost money from the patient care they provided while almost 40 percent operated with a negative total margin. The growing uncompensated care burden, coupled with continued cuts to Medicare and Medicaid, has many hospital executives throughout the state on edge. Last year, in effort to help state lawmakers balance the state budget, hospitals agreed to a three-year program that imposes a fee on 1.45 percent of hospitals’ net patient revenue to fund Medicaid. The Provider Payment Agreement raised Medicaid payment rates and ultimately helped some Georgia hospitals, but is expected to result in an overall $16 million loss the Georgia hospital community in FY12, further adding to the financial stress.

“We are concerned about the possibility of some Georgia communities, especially those in rural areas, losing their local hospitals in the near future,” said Parker. “It would not only create health care access problems for thousands of Georgians, it would deal a devastating economic blow to these areas.”

The report shows that the mere presence of a hospital is a major source of jobs in any given community. As the state’s unemployment rate climbed to more than 10 percent in 2009, the Georgia hospital workforce remained strong with more than 144,000 full- and part-time jobs. When an economic multiplier is applied to this number, it reveals that hospitals sustained over 288,000 full time jobs in Georgia. The output multiplier considers the “ripple” effect of direct hospital expenditures on other sectors of the economy, such as medical supplies, durable medical equipment and pharmaceuticals. Economic multipliers are used to model the resulting impact of a change in one industry on the “circular flow” of spending within an economy as a whole.

“In many communities throughout Georgia, hospitals are among the largest employers, creating jobs thousands of jobs that otherwise would not exist,” Parker added. “At such a fragile time in our state’s economy, it is my hope that our state and federal lawmakers do everything possible to preserve these local, well-paying jobs that go to protect the health of Georgia families.”

The hospital economic impact report also measures hospitals’ direct economic contributions to Georgia’s working families. Using a “household earnings multiplier,” the study determines that hospitals generate more than $14 billion in household earnings in the state.

The household earnings multiplier measures the increased economic contributions from households employed directly or indirectly by hospitals through daily living expenditures.

About GHA

Established in 1929, GHA is the state’s largest trade organization of hospitals and health systems providing education, research and risk management services to its 174 hospital and health system members.